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North Dakota exchange overview

Could North Dakota be doing more to preserve the Affordable Care Act’s provisions? Compare its efforts to other state-level actions.

North Dakota did not establish its own exchange, so enrollments are completed via HealthCare.gov. Three insurers offer plans in North Dakota’s exchange in 2020: Medica, Blue Cross Blue Shield of North Dakota (Noridian), and Sanford.

Open enrollment for 2020 health plans has ended, although North Dakota residents with qualifying events (including loss of employer-sponsored coverage) can still enroll or make changes to their coverage for 2020. The next open enrollment period, for plans effective in 2021, will begin November 1, 2020.

Starting in 2020, North Dakota has a reinsurance program. As a result, premiums for 2020 (before any subsidies are applied) are lower than they were for 2019, and significantly lower than they would otherwise have been in 2020.

North Dakota reinsurance program took effect in 2020, and premiums decreased as a result

North Dakota House Bill 1106, which called for the creation of a reinsurance program to stabilize the state’s individual insurance market, passed with unanimous support in the state House of Representatives in February 2019, and nearly unanimous (46-1) support in the Senate. It was signed into law by Governor Doug Bergum in April 2019, and heralded by Insurance Commissioner Jon Godfread as a measure that will “help ease the heavy burdens our health insurance market is facing.”

North Dakota is one of a dozen states that have implemented reinsurance programs using a combination of state funding and federal pass-through funding. It’s called pass-through funding because it’s actually federal savings that are passed through to the state. Because reinsurance results in lower premiums, the premium tax credits (subsidies) are also smaller. That saves the federal government money, and states can use 1332 waivers that allow the state to keep the savings (rather than letting the federal government keep the savings) and use it to fund the reinsurance program.

For the state portion of the funding, North Dakota’s legislation calls for the state to impose an assessment on group health insurers in the state. This is a common approach that other states have successfully used (in most states, the federal pass-through funding covers the majority of the cost, but a state’s 1332 waiver proposal has to demonstrate how the state will fund its portion of the cost).

Average rates dropped by nearly 6% in 2020 (without reinsurance, they’d have increased by nearly 15%)

Since rate filings for 2020 were due well before the state’s reinsurance proposal had gained federal approval, North Dakota’s insurance commissioner directed the state’s insurers to file two sets of rates: One based on reinsurance being enacted and the other based on the status quo. Once the federal government granted approval for the 1332 waiver, the North Dakota Insurance Department used the rate filings based on the reinsurance program being in place. The following average rate changes were approved for 2020 (all data is from North Dakota SERFF):

Medica: 17 percent decrease (Medica’s alternate filing was for a 3.9 percent rate increase if reinsurance hadn’t been approved; they have 373 members)

Blue Cross Blue Shield of North Dakota/Noridian: 1.7 percent decrease (Noridian’s alternate filing was for an 18.3 percent increase; they have 17,744 members)

With the reinsurance program in place, North Dakota estimated that premiums in the individual market would be up to 20 percent lower than they would otherwise have been, which was very accurate: Overall, there was a weighted average rate decrease of 5.72 percent for 2020;without reinsurance, there would have been an average rate increase of about 14.65 percent.

But it’s important to understand that these numbers are all referring to full-price premiums, which are only paid by about 13 percent of the state’s exchange enrollees (but by all of the off-exchange enrollees). When benchmark premiums decrease from one year to the next, premium subsidies decrease as well. So the change in a person’s net premium (ie, after their subsidy is applied) can be very different from the average premium changes for full-price plans.

State officials also projected that with reinsurance in place, individual market enrollment would be 1 percent higher in 2020 than it would otherwise have been (this is because coverage is more affordable for people who don’t receive premium subsidies, since full-price premiums are lower). Enrollment in the exchange ended up being slightly lower in 2020 than it had been in 2019, but enrollment may have increased outside exchange. Reinsurance reduces premiums for everyone who buys coverage outside the exchange, since none of those enrollees qualify for premium subsidies.

As was the case for 2019, insurers in North Dakota have added the cost of cost-sharing reductions (CSR) to silver plan premiums for 2020. As a result, premium subsidies continue to be disproportionately large for people who are subsidy-eligible but select a non-silver plan (more details below on North Dakota’s approach to this in 2018 and 2019).

North Dakota’s path to reinsurance

HB 1106 did not come as a surprise in 2019. Reinsurance has been gaining popularity as an option for stabilizing individual insurance markets around the country, and it’s something that North Dakota insurance regulators were discussing throughout 2018. In May 2018, North Dakota’s Insurance Commissioner, John Godfread, announced that the state’s insurance department would conduct a study to analyze various approaches to state-based health care reform.

Over the next few months, the state considered consider the possibility of expanding the existing high-risk pool, the Comprehensive Health Association of North Dakota (CHAND), as well as the possibility of implementing a state-based reinsurance program. The ACA included federal reinsurance, but it was temporary and expired at the end of 2016.

Godfread’s 2018 announcement also noted that the North Dakota Insurance Department was “analyzing Idaho’s state-based plan initiative and how a similar state-based plan allowance could operate in North Dakota. The state-based plan initiative would allow insurance carriers to offer plans, outside of the existing ACA exchange, that would be more flexible in how those plans are underwritten and designed.” It’s worth clarifying, however, that CMS blocked Idaho’s proposal, as it was not legal under the ACA.

But North Dakota was considering a modified version of what Idaho had planned to implement, as Godfread’s statement clarifies that the potential state-based plans in North Dakota “would still be required to offer all ACA mandated essential health benefits, be guaranteed issue, but would potentially allow for credits for healthy behavior or other health-related factors.”

In late September 2018, the North Dakota Insurance Department publicized their study findings. The study concluded that the two best options for North Dakota to pursue would be a state-based reinsurance program and the creation of state-based health insurance plans that insurers could sell outside the exchange. Ultimately, HB 1106 was introduced on January 3, as soon as the 2019 legislative session got underway, and was enacted in April.

For 2018, North Dakota was one of only two states where insurers were not allowed to add the cost of cost-sharing reductions (CSR) to premiums, despite the fact that the Trump Administration stopped reimbursing insurers for the cost of CSR. In most states, the cost of CSR was added to silver plans, either across the full on- and off-exchange market, or only to the on-exchange market.

On October 12, 2017, after months of dithering with the issue, the Trump Administration announced that CSR funding would end immediately. That left some insurers and states scrambling to implement appropriate premiums for 2018. Although final rates had already been transmitted to HealthCare.gov at the end of September, HHS agreed to allow, on a case-by-case basis, some insurers to refile new rates with the cost of CSR included in the premiums. Specifically, insurers in states like North Dakota that did not allow a CSR load in the initially-approved rates, were allowed the opportunity to refile new rates if state regulators permitted it.

On October 16, North Dakota Insurance Commissioner John Godfread indicated that his office was determining what course of action to take regarding the lack of CSR funding. But on October 17, the North Dakota Insurance Department announced that the previously approved rate increases would remain in place, and that they would not allow North Dakota insurers to add the cost of CSR to their premiums for 2018 (North Dakota, DC, and Vermont were the only jurisdictions where insurers were prohibited from adding the cost of CSR to premiums for 2018).

Consumers are best protected when insurers add the cost of CSR to on-exchange silver plans, and allow people the option of purchasing off-exchange silver plans that don’t have the cost of CSR added to the premiums. This allows premium subsidies to grow for everyone who gets premium subsidies, including people who purchase non-silver on-exchange plans that don’t have the cost of CSR added. For people who want a silver plan and who qualify for premium subsidies, the subsidies grow to cover the added cost of CSR. And for people who want silver plans but who don’t qualify for premium subsidies, the off-exchange silver plans are a good option, as they don’t have the added premium cost to cover CSR.

About a third of the states took that option for 2018, and North Dakota joined them for 2019 (as did several other states where the 2018 approach was to add the cost of CSR to all silver plan rates, including plans sold outside the exchange). The state’s rate filing instructions for 2019 directed insurers to add the cost of CSR to on-exchange silver plans, and to the identical silver plans that are sold off-exchange. But they also instructed insurers to file “corresponding” silver plans that would only be sold off-exchange, and that don’t have the cost of CSR added to premiums.

The North Dakota Insurance Department confirmed in May 2018 that their expectation was that Medica would once again be available on-exchange in 2019; that was confirmed when Medica’s redacted rate filing became available. And Sanford expanded their coverage area to the whole state, after limiting it sharply for 2018.

Enrollment in North Dakota’s exchange

21,666 people enrolled in private plans (QHPs) through the North Dakota exchange during the open enrollment period for 2020 plans, which was slightly lower than enrollment had been the year before. Enrollment in North Dakota’s exchange peaked in 2018, when 22,486 people enrolled.

North Dakota was one of only a handful of states where exchange enrollment increased every year from 2014 through 2018. In most states that use HealthCare.gov, peak enrollment occurred in 2016, and enrollment numbers have declined since then. In North Dakota, the first decline came in 2019 (South Dakota is the only other state with a fully HHS-run exchange where enrollment grew every year from 2014 through 2018).

Here’s a look back at enrollment numbers in North Dakota’s exchange from 2014 through 2020:

10,597 people had enrolled in private plans through the North Dakota exchange as of April 19, 2014. This was the lowest total of any state in the country, but it was still more than double the number of North Dakota residents who had enrolled as of March 1. And in sparsely populated North Dakota, it’s not surprising that enrollment was so low; only Vermont, Wyoming, Alaska, and DC have smaller populations than North Dakota.

Insurer participation in North Dakota’s exchange

With Medica’s return to the exchange, North Dakota once again has three insurers offering individual market plans in the exchange, and all three insurers offer plans in most areas of the state (there are four counties in northwestern North Dakota where Medica plans are not available in 2019).

North Dakota’s exchange has had more consistent insurer participation over the years than most states. Medica, Sanford, and Blue Cross Blue Shield of North Dakota (Noridian) all offered plans in 2014 — the first year the exchanges were operational — and continued to do so through 2017.

The first major change came in 2018 when Medica exited the exchange altogether. And although Sanford had offered plans statewide in previous years, they drastically reduced their coverage area in 2018. Sanford plans were only available in a total of five counties in the Fargo and Bismark areas. Residents in the rest of the state only had Blue Cross Blue Shield of North Dakota options available.

But for 2019, insurer participation returned to what it had been in 2017, with Sanford once again offering plans statewide, and Medica offering plans in all but a few northwestern counties. Blue Cross Blue Shield of North Dakota continues to offer plans statewide in the exchange, as they have since 2014.

Average rate changes in North Dakota’s exchange

Average rate increases for 2019 were announced by the ND Insurance Department in late September 2018:

Blue Cross Blue Shield of North Dakota (Noridian Mutual): On-exchange, the average rate increase was 2.29 percent, and off-exchange, it was 1.43 percent (the proposed average rate increase across all plans was 5.79 percent, but that was reduced during the rate approval process). Carriers can offer different plans on- and off-exchange, but BCBSND’s rate filing indicates that the cost of CSR was added to both on- and off-exchange silver plans, and the wording of the filing indicated that BCBSND did not opt to create different silver plans to be sold only off-exchange for 2019.

Medica: On-exchange, the average rate increase was 25.99 percent. Off-exchange, it was 23.03 percent (the proposed average rate increases ranged from 16.3 percent to 29.9 percent). Medica only had 559 enrollees in 2018, since they only offered off-exchange plans in 2018. Enrollment was expected to increase in 2019, as their plans are once again available on-exchange nearly everywhere in the state.

Sanford: On-exchange, the average rate increase was 21.53 percent, while off-exchange it was just 7.6 percent (proposed average rate increases ranged from 28.7 percent to 34.5 percent). Sanford had 3,300 members as of early 2018. The cost of CSR was added only to on-exchange silver plan rates for 2019, and Sanford is offering four off-exchange-only silver plans that don’t include the cost of CSR in their rates. In 2018, when most other states allowed insurers to add the cost of CSR to silver plans rates, many insurers opted to add the cost only to on-exchange silver plan rates and offer different off-exchange silver plans without the cost of CSR added to the premiums. In those cases, there was a significant difference between the on- and off-exchange average rate increases. But 2019 is the first time that North Dakota insurers were allowed to add the cost of CSR to premiums.

BCBSND, Sanford, and Medica have all continued to offer small group plans in the state, with modest rate increases. In addition, United Healthcare began offering small group health plans in North Dakota in 2019.

Here’s a look at how average rates have changed over the years in North Dakota’s exchange:

2014 was the first year that ACA-compliant plans were available, and the rates were essentially actuaries’ educated guesses. PricewaterhouseCooper LLC calculated weighted average rate changes from 2014 to 2015 across the entire individual market (on and off-exchange), and found an average price decrease of 3 percent in North Dakota. But if we look just at silver plans, people who had the cheapest silver plan in the ND exchange in 2014 experienced an average rate increase of about 13 percent in 2015, assuming they didn’t make any plan changes. If they were willing to switch to the new cheapest silver plan however, their rate increase was much more muted, averaging just 4 percent. And a Commonwealth Fund analysis in December 2014 found an average rate increase of 7 percent (for a 40-year-old non-smoker) across all plans and metal levels in the North Dakota exchange.

For 2016, The overall weighted average rate increase in the North Dakota exchange was 12.2 percent, based on enrollment numbers as of September 2015.

For 2017, Blue Cross Blue Shield of North Dakota implemented a small average rate decrease. BCBS of ND had the majority of the exchange’s enrollment, so their rate decrease meant that the overall average rate increase in North Dakota was just 1.3 percent for 2017, which was tied with Rhode Island as the lowest in the country, by far. The insurers in North Dakota’s exchange implemented the following average rate changes for 2017:

BCBS of ND: a 1.57 percent decrease (the carrier had proposed a 1.82 percent rate increase).

In October 2017, the North Dakota Department of Insurance announced that rates for 2018 individual and small group health insurance had been finalized. ND Insurance Commissioner, Jon Godfread, who is not a fan of the ACA, states that “the heavy burdens created by Obamacare are continuing to force rates to significantly increase as time goes on,” but went on to say that the state was fortunate to still have a competitive market. The approved rates for 2018 were based on the assumption that CSR funding would continue, despite the fact that it was eliminated a few weeks before the start of open enrollment. And as noted above, insurers in North Dakota were not allowed to revise their rates to account for the loss of CSR funding. North Dakota’s exchange insurers implemented the following average rate increases for 2018:

Sanford: 7.9 percent (proposed increases were 10 percent to 13 percent, depending on the plan; Sanford had 1,200 members). Sanford sharply reduced their coverage area for 2018, only offering plans in the Fargo and Bismark areas.

Medica: 18.8 percent (approved as proposed, but only available off-exchange). Medica’s plans are only available off-exchange for 2018, and not on-exchange. Medica tried to revise their proposed rate increase to be larger once it became apparent that Congress and the Trump Administration were not taking steps to commit to CSR funding for 2018, but their request was denied by the North Dakota Insurance Department, and Medica opted to exit the exchange as a result. Medica rejoined the exchange for 2019, when they were allowed to add the cost of CSR to silver plan rates.

Navigator grants have declined sharply under the Trump Administration

Three organizations in North Dakota received a total of nearly $637,000 in navigator grants in 2015 that were used for outreach and enrollment efforts. The grants were awarded to Family HealthCare Center, Great Plains Tribal Chairmen’s Health Board, and Minot State University’s North Dakota Center for Persons with Disabilities. Residents in North Dakota can reach out to any of these organizations for in-person enrollment help.

But Blue Cross Blue Shield of North Dakota — the state’s largest insurer — opted in December 2014 not to continue to renew policies that had been scheduled for termination. Their insureds had the option to switch to a new ACA compliant BCBS plan, or purchase new coverage from another carrier for 2015.

The federal government has issued extensions each year, allowing states to let grandmothered plans renew if insurers choose to continue those plans. North Dakota has gone along with each extension, so grandmothered plans can currently remain in force until the end of 2019 in the state. But as of 2018, Sanford was the only insurer that still had grandmothered plans in the state, and there were fairly few policies still in force.

North Dakota exchange history

The North Dakota House of Representative voted against a state-run health insurance exchange in 2011, and then-Gov. Jack Dalrymple’s administration reiterated that position in November 2012.

But North Dakota expanded its Medicaid program under a provision of the Affordable Care Act. Dalrymple favored the expansion, and the state House approved the measure in February 2012. Enrollment in Medicaid in North Dakota increased by 30 percent from the end of 2013 to December 2018.